Corporate Psychopaths and the 2008 Financial Crisis

Back in 2008, the world watched in awe as events that would ultimately lead to what could possibly be the biggest transferral of wealth in the human history shifted into gear. Risky investments, “toxic assets” and collateralised mortgage obligations caused untold damage to the global economy and eventually it fell down to the tax-payer to bail out the failing banks. The phrase “Too big to fail” became prominent in the media coverage of the incident as, the very banks and financial institutions that caused the crisis, were painted as being the only people who really knew how to sort it out.

In the US, a $700 billion plan was concocted in order to suck up underperforming collaterals and assets at the tax-payers expense, however, it made no difference and the global financial system continued to edge towards the brink of collapse. Britain’s attempt at injecting capital into the financial system went much the same way, with £500 billion of tax-payer money being thrown at the issue and having almost no effect whatsoever.

In fact, quantitative easing has, so far, appeared to be nothing more than a global transfer of wealth. Aiming it would seem, to take money from ordinary working people and hand it over to people that are either extraordinarily incompetent at their job, or have such a lack of empathy towards their fellow man, they are willing to make decisions that will cause financial hardship for many. Apparently for the financial gains of the few. To some, this behaviour may come across as outright psychopathic, but few of those people would have put as much time and thought into explaining this behaviour as Professor Clive Boddy, Professor of Leadership and Organisation Behaviour at Middlesex University Business School in London.

Professor Clive Boddy, Professor of Leadership and Organisation Behaviour at Middlesex University Business School in London

“a theory of the Global Financial Crisis which argues that psychopaths working in corporations have had a major part in causing the crisis.”

Professor Boddy’s latest research is focused on studying the effect of corporate psychopaths on businesses, their employees, marketing, corporate ethics and the global financial crisis. Having published his theoretical paper, Corporate Psychopath Theory of the Global Financial Crisis back in 2011, Boddy has since gone on to further research the implications of his theory and has given various interviews and a Ted-X Talk on the subject. However, while this theory holds a lot of weight, it doesn’t seem to have caught on or caused much of a stir beyond the people already interested in psychopathy and its effects on society.In summary, Boddy states that the paper: “elucidates a plausible theory about the Global Financial Crisis and the role of senior financial corporate directors in that crisis.” and “presents a theory of the Global Financial Crisis which argues that psychopaths working in corporations and in financial corporations, in particular, have had a major part in causing the crisis.”

It is estimated that around 1% of the general population are psychopaths, with that figure rising to 3-4% for more senior positions in businesses and organisations. This is an issue as, by definition, corporate psychopaths are cold, calculating and ruthless individuals willing to lie and manipulate in order to further their own objectives. It would be hard to find anybody that thought putting such a person in charge of huge financial, military or government institutions would ever be a good idea.

Boddy’s paper asserts that “Corporate Psychopaths, rising to key senior positions within modern financial corporations, where they are able to influence the moral climate of the whole organisation and yield considerable power, have largely caused the crisis.” It continues to explain that changes in the way people are employed have, in fact, made it easier for corporate psychopaths to gain access to these positions and enabled them to abuse those positions. According to the paper, prior to the final third of the 20th Century, corporations were relatively stable and switching companies mid-career was questionable, almost inadvisable as employers questioning their reasons for wanting to change jobs could potentially block any further rises.

Now, in an age where switching careers at any time has become the norm, it becomes increasingly hard to identify corporate success with any particular manager. This becomes advantageous for corporate psychopaths as mistakes are usually not noticed until it is too late and the offending managers have moved on to better jobs elsewhere. Success can then be claimed by those willing to shout loudest and longest to claim it, usually by those who appear to have the most influence, charm or political skills. Corporate Psychopaths would outweigh any normal person in terms of these traits and would also be ruthless and calculated enough to use them efficiently.

Boddy argues that the environmental shift by corporations from one that would hold psychopaths in check, to one where they could flourish unopposed has caused this increase of corporate psychopaths in higher places. He states that, as evidence of this, “senior level remuneration and reward started to increase more and more rapidly and beyond all proportion to shop floor incomes and a culture of greed unfettered by conscience developed.” Boddy also mentions that large financial institutions are not the only organisations that can fall foul of this toxic leadership. Any business or organisation, from banks and governments to military and industrial agencies, that can offer rewards substantial enough to attract corporate psychopaths are potential targets.

“…Capitalism, at its most ruthless, is a physical manifestation of psychopathy. Theirs is the brain anomaly that shapes our world.”

Towards the end of the paper, Boddy questions why, in a time where methods for the identification of corporate psychopaths do exist, are there practically no screening process for their detection? If, he states, this theory is correct, then we are indeed only at the end of the beginning of the crisis. With insidious trade agreements such as TTP, TTIP and TISA all being discussed secretly, seemingly withheld from public debate, Boddy’s question is an increasingly valid one. Talking about psychopath screening in an interview on Rob Kall’s Bottom Up Radio Show, Boddy asserts “Mankind appears to be standing on the brink of so many different types of unpleasant results, in terms of the economy, in terms of the environment, in terms of overfishing in the sea. I think we have reached the stage where we really need to make sure that the people that are leading us, in organisations of any kind, are not psychopathic and, therefore, have a conscience.”

Could it be that the very people that are senior enough to make such decisions about the process in which job candidates for high-ranking positions are vetted and screened are resisting this? It is possible that, due to relationships between entrepreneurship and sub-clinical psychopathy, the very traits that make these people Corporate Psychopaths are the very traits these corporations are looking for in order to further perpetuate their agendas. In what is often and, not by accident, called a “cut-throat environment” they would be ideal candidates for business looking to crush the competition and assert their supremacy over chosen markets, industries, economies and even governments.

Jon Ronson, author of The Psychopath Test: A Journey Through the Madness Industry, wrote and remarked on a conversation with Dr Robert Hare in his own Ted Talk about Psychopaths which you can watch below “… capitalism at its most ruthlessrewards psychopathic behaviour —the lack of empathy, the glibness,cunning, manipulative.In fact, capitalism, perhaps at its most remorseless is a physical manifestation of psychopathy.” If Boddy’s theory is correct, what could this mean for Capitalism in itself? Does it discredit so much to the point of becoming obsolete or are there, as Boddy suggests, ways in which we can pull it back on track from the force of greed, consumerism and destruction these dark managers seem to have corrupted it to?

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Published by Ryan Morwood

Ryan is News Leak's Editorial Director. He, like many News Leak readers shares a deep concern about social and economic inequality, civil and human rights, the state of the mainstream media and a wide range of social, political and environmental issues. His interests include astrophysics and space science, drug policy and artificial intelligence.
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